Instant Pot was purchased in 2017 by Cornell Capital, a private equity company.
I discovered this just now by when I thought "I bet some private equity company bought them and destroyed them in order to make short term profits" and then googled "instant pot private equity" to see if that was the case. It appears so.
This article talks about debt likes its free money. Getting a loan means convincing a lender that you are very likely to pay it all back. If PE firms had a history of not paying back debts, why would lenders continue to lend to them? Like, who is this moron losing money on loans every day?
Its not that the underlying firm cannot support the debt load, if the proceeds from that debt were put in to productive uses (expand production, design new products, more marketing, etc). The problem is that the debt is taken on, then the firm pays huge special dividends or “management fees” to the PE firm. PE firm often recoups the initial investment within first year. Then the firm is forced to focus on short term gains to make the numbers look good so PE firm can find another sucker (either another PE firm or IPO).
If you look at Google trends, searches for instant pot peaked after the 2017 buyout.
I think the examples of leveraged buyouts destroying brands is exaggerated. If it is a good brand, it will exist. It is just a chance of ownership from a capital firm to a lender.
They made a lot of sales. Why does that have to be the death of the company? Just keep making good products. Everything doesn’t have to go up forever. I know this paints me as naive but growth above all else is eating us alive. How much growth is their bankruptcy?
Things don't have to have continual growth. It actually is possible for a company to just sustain. However, if you see your rapid growth and then rapid decline, that is a dangerous transition for companies. It's easy to overspend and over commit yourself. Random websites on Google say instapot sales are down 65 percent in the last year. That is tough for any company to handle. WSJ says they had to cancel over 100M in contracts.
That said, bankruptcy doesn't necessarily mean it is the end of the product line. More likely it means some investors will lose some money, which is OK because they are in the business of making bets, and some won't pan out
Because youre at the mercy of the distributors forcing you to lower prices, especially with the monopsony that exists in the US. Because you are at the mercy of your manufacturers increasing prices especially during a supply chain foul up during and after the pandemic which would affect you significantly more considering how big and heavy your product is.
There’s a lot of reasons a company selling a lot of product can still go under in todays market.
I discovered this just now by when I thought "I bet some private equity company bought them and destroyed them in order to make short term profits" and then googled "instant pot private equity" to see if that was the case. It appears so.
Gotta love those private equity companies. I'm no expert, but this article is a good overview of how they can be incentivized to kill good brands. https://www.vox.com/the-goods/2020/1/6/21024740/private-equi...